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What Is The Best Way To Get A Working Capital Loan?

Working capital is nothing but the amount of money that is required to maintain a company’s operating cycle. At times a business, especially if it’s a small business, may find itself lacking the money to smoothly run its day-to-day operations. This is where a working capital finance can be of help.

When applying for such a loan, it is important to know how much working capital is required and what will be working capital loan terms, as a business owner will never want the leverage to go so high that he or she is unable to repay the loan. Thus, you should only go for a working capital loan if your business is generating reasonable operating profit.

Here are the different options available for a small business enterprise to arrange for working capital finance:

Trade Creditors

Instead of going for long-term loans, one of the better options for small business units is to go for a trade creditor loan. Such a loan is easily available if you have a genuine and trustworthy relationship with your trade creditors, who will not have an issue granting you a short-term working capital loan, especially if you have paid them on time in the past. Due to this relationship, a trade creditor may be willing to extend support to enable you to meet a big order and you get a decent time frame to churn your capital.

Factoring Your Order

Another feasible option for obtaining a working capital loan is factoring, a facility many entrepreneurs are still unaware of. Factoring is an option where once you have filled an order, a factoring company buys your account receivable and then handles the collection. This type of financing is more expensive than conventional bank financing as they might charge you a bit more given that you don’t need to go for any documentation or collateral. For those who are new to the industry, such options are great as you don’t end up compromising your brand image as you start out.

Small Business Loans or Working Capital Loans

Lenders now offer small business loans or working capital finance to help a business grow and sustain itself during times of need. Usually these loans go up to Rs.30 lakh and have flexible repayment tenors. With affordable interest and minimal documentation, a small business can get approved for a working capital loan in just 24 hours—and infuse needed funds to keep it functioning smoothly. This loan doesn’t require any collateral as it is an unsecured loan, thus making it easier for a small business.

Account Receivable Loan

Account receivable loans are based on the confirmed sales order value of a business. Such loans are perfect for a company that requires funding for filling a sales order. However, you need to be reputable and have a good credit history for getting this type of working capital loan.

Line of Credit Facility

It is usually very difficult to find out exactly how much your business needs as working capital. When you cannot decide on the right amount, it may be a better idea for you to opt for a business line of credit facility. Under it, your business will be given a certain credit for a certain period. You have the freedom to withdraw an amount you need at any given time, and withdraw more later up to the limit. You may also repay and re-avail the amount you have repaid within the chosen tenor. This makes a line of credit very flexible for a small business.

Equity Funding

Equity funding is a great option for many, especially those who are not able to generate profit in their initial years of operation. Usually, lenders tend to not give loans to a company that doesn’t show any profit in its books and even if they do, they may charge a high premium on it. As far as equity funding is concerned, the funds may be injected from your own personal resources or from a family member, a friend or a third-party investor with a certain amount of return on investment, which may turn favourable for you in the long run.

If you are seeking a Working Capital Loan or a Business Line of Credit, look no further than Bajaj Finserv, which offers these loans at nominal interest and easy online application on terms that are created for small businesses.

Terms and Conditions

I declare that all the particulars and information provided by me in this application form are true, correct, complete and up-to-date in all respects and that I have not withheld any information whatsoever.

I confirm that I have/had no insolvency proceedings against me nor have I ever been adjudicated insolvent by any court or other authority and I further confirm that I have read the information on various loan products made available by Bajaj Finance Limited (hereinafter referred to as “Bajaj Finance?) on the Website www.bajajfinserv.in.

I authorize Bajaj Finance to exchange, share all information and details as provided by me in my application and in relation to my existing loans and/or repayment history to any third party including but not limited to its group companies, service providers, banks, financial institutions, credit bureaus, telecommunication companies, statutory bodies, etc. for customer verification, personalization of products or services, credit rating, data enrichment, marketing or promotion of Bajaj Finance services or related products or that of its associates and affiliates or for enforcement of your obligations and I shall not hold Bajaj Finance (or any of its group companies or its/their agents/representatives) liable for the use/sharing of the information as stated above.

I agree and affirm that Bajaj Finance may contact me and communicate with me over telephonic calls, or SMS on the mobile number mentioned in the application, or through any other communication mode (“Communication Modes?) to verify the details provided by me on the application. Further, I confirm that I would like to know through the above mentioned Communication Modes various Bajaj Finance loan offer schemes or loan promotional schemes or any other promotional schemes relating to various products/services offered by BFL/its group companies from time to time and hereby authorize BFL, its group companies, employees, agents, associates to contact me from time to time for the same.

I agree and confirm that laws in relation to the unsolicited communication referred to in the “National Do Not Call Registry? (the “NDNC Registry?) as laid down by the Telecom Regulatory Authority of India will not be applicable for such communication/calls/ SMSs received from BFL, its group companies, its employees, agents and/or associates.

I undertake to keep Bajaj Finance updated of any change in the information provided by me in this application form.

I understand and acknowledge that Bajaj Finance shall have the absolute discretion, without assigning any reason to reject my loan application and that Bajaj Finance shall not be responsible/liable in any manner whatsoever for such rejection.

I further understand and agree that pursuant to this application form, I will be required to submit documents to the satisfaction of Bajaj Finance and accept the loan terms and conditions for availing the loan granted to me by Bajaj Finance from time to time.